Extra 1% interest for CPF savings and MSTU.

The following is contributed by a reader:

 

The CPF Board's response is appended below. I've edited the questions and part of the response to mask personal information hence, the flow of CPFB's reply may not make sense but I trust that the key points of interest are in there. Feel free to reproduce it:
 

Question: How would the extra 1% interest earned on OA + SMRA be earned? 

 

The extra 1% interest per year is currently paid on the first $60,000 of a member’s combined CPF balances.

 

The priority of the accounts that make up the $60,000 is as follows: 

 

1. Retirement Account (RA), including balances used to pay for the annuity premium under CPF LIFE

2. Ordinary Account (OA), up to $20,000

3. Special Account (SA)

4. Medisave Account (MA)

 

In general, CPF interest is computed monthly, and will be credited and compounded to your respective accounts yearly.

 

Any excess of the FRS will remain in the OA/SA which the member can apply to withdraw.  

 

There are no restrictions on when a member, age 55 and above, can make the withdrawals throughout the year. Now, they can apply for withdrawal at any time as long as they have the withdrawable monies and the Board will assess their applications.

 

 

 

 

 

 

 

Question: Assuming FRS of $X and MSTU of $(X + Y) including interests. At age 55, can $Y be withdrawn? 

 

No, the top-up monies of $Y cannot be withdrawn as these are meant for recipient’s retirement needs. Hence, the member cannot apply to withdraw the top-up monies:

(a) for payment of education, investments, insurance, housing, etc;

(b) by pledging his property in lieu of the Full FRS; and

(c) via exemption from the Retirement Sum Scheme.

 

Related posts:

1. Retire with a bond and an annuity.

2. CPF MS Top Up and interest computation.